VDC Research: RFID, Barcode, Retail Automation & Self-Service Market Blog

New Research: Disruption Ahead in the Handheld Barcode Scanner Market

VDC is pleased to announce the publication of its annual study of the handheld barcode scanner market.  This research is an invaluable strategic and tactical planning tool for barcode scanner vendors and their channel partners.  Highlights of the research include:

• Forecasted revenue CAGR of 5.2% for the global market through 2017 disguises significant turmoil below the surface, for vendors, the channel and end-users.

• As 2013 nears its end, vendors are reporting slowing refresh cycles and a challenging climate outside of new, non-traditional growth markets – such as healthcare – where large investments in sales and marketing are required to win new accounts.
• The decline of laser-based scanning will accelerate over time, with a corresponding acceleration of the imager-based scanning market.
• Low cost Asian vendors will continue to steal share from the large established American and European vendors such as Motorola Solutions, Honeywell and Datalogic.
• End-user interest in the use of consumer devices for scanning is widespread, intense, and growing, posing a real opportunity for mobile device vendors and a real threat to scanner vendors focused on retail and hospitality.

To learn more, download the Executive Brief now.
(Above links to landing page with similar content. Registration required to get to e-brief.)

New AutoID Coverage from VDC: Announcing our Machine Vision Solutions Research Program

After several months of investigation and early market analysis conducted by our AutoID team, VDC Research Group is pleased to announce the launch of our 2014 Machine Vision Solutions Market Research Program. This new research is a natural fit with our legacy coverage of core AutoID technologies such as barcode scanners and imagers, RFID and RTLS as well as our on-going analysis within industrial automation and sensors sectors. VDC’s machine vision program will help AutoID vendors, industrial automation equipment suppliers and machine vision specialists understand the key trends, issues and drivers shaping the machine vision market in industrial and non-industrial sectors. 

Machine vision components and systems sales have emerged as a multi-billion dollar global market opportunity. At its core machine vision is the process of applying a range of technologies and methods to provide imaging-based automatic inspection, process control, robot guidance and much more. As these solutions become a more critical part of automating business processes and operations across industries, we expect broader end-user adoption and market growth in both manufacturing and non-manufacturing sectors.

The research program influencer period is now open for vendors and solutions providers.  Research program influencers help shape our upcoming machine vision market coverage, segmentations, analysis and more. Please contact VDC for more information about becoming a research influencer and gain early access to machine vision insights from our AutoID team. We can be reached at: i[email protected]

Key research program components include the following:

• Track 1: VDC Views: on machine vision solution selection & deployment

• Track 2: Machine Vision Market Analysis reports for:

-    Industrial/Manufacturing Sectors

-    Emerging Markets/Verticals

• Track 3: Vendor Spotlights & Evaluation Guide
• Track 4: Machine Vision End-user Analysis report

 What are some of the key questions answered by this research program?

• Where are the growth centers for machine vision components and solutions in terms of industry sectors, applications and regions?
• Which vendors and solutions providers are leading the machine vision market today? Which companies are considered innovators shaping the future direction of the machine vision landscape?
• Which types of enterprises most frequently deploy machine vision solutions and why?
• How will vendors differentiate themselves from their peers in the highly-fragmented, highly-competitive machine vision market?
• In which environments are the relatively less complex smart camera-based machine vision systems a significant threat to PC-based solutions?

Recap of VDC's AutoID Team's Q2 Blogs: Did You Miss Any?

If you missed any blog posts from Q2, here is a recap, including hyperlinks and core AutoID technology focus for each posting. 

A Preview of our Handheld Barcode Scanner Report

AutoID Focus: Barcode

The recent trends in the barcode industry continued in 2012. What is the state of the handheld barcode market? This article looks at the state of the barcode industry and provides insight into key trends and competitive dynamics for the handheld scanner market.

Cognex watching Microscan’s products like a “Hawk”; files IP infringement claim

AutoID Focus: Barcode

In April, Cognex filed a lawsuit against competitor Microscan’s Mobile Hawk product for patent infringement: Microscan is refuting the claim of infringement alleging it is original technology.   

How does Legislation Impact Barcode Technology Adoption?

AutoID Focus: Barcode 

Many governments have looked towards barcode technology to enhance traceability of highly counterfeited products (pharmaceuticals, food, etc.). Legislation usually takes time for implementation, however. How does legislation impact barcode adoption?  

Embedded Sensing & M2M Enable Advanced Efficient Agriculture with RFID

AutoID Focus: RFID

A new product from RFMicron, the Magnus chip, allows for upgrades in typical passive RFID technology. These upgrades enhance performance and adjust performance for given levels of moisture. One particular industry this could help is agriculture. Learn more by reading this post.

What is Shaking Up the Barcode Technology Market?

AutoID Focus: Barcode

2012 was interesting year for many markets, including the barcode market. Beyond economic stagnation and volatility, there are three other factors that contributed to the performance in the barcode technology market.

TEKLYNX International Partners with VDC Research on Recent Channel Leadership Workshops

AutoID Focus: Barcode

In mid May, TEKLYNX partnered with VDC, CEO Focus, and Felton Consulting, to present two separate channel leadership workshops. These workshops offered a valuable opportunity for executive-to-executive interactions. Well over 100 attendees participated in the two live events.

Is this the end of barcode labels as we know it?

AutoID Focus: Barcode

Many technologies are changing the traditional look of black and white barcodes. Two such relevant technologies are colored barcodes and watermarks (invisible barcodes). Do these technologies prove to be the demise for barcodes or are they merely complements?

The Power of Datalogic's Magellan 9800i - Now Available

AutoID Focus: Barcode

Growth in the barcode industry has continued, anchored by the need for camera based imagers. Datalogic, this June, released a game changer for the retail industry in the multi-plane camera based scanner-scale, the Magellan 9800i, specifically for checkout.

What You See is Just Not What You Eat Anymore

AutoID Focus: Barcode

In China, many wealthy people have looked towards international sources for their cuisine. Why? Because there have been several counterfeiting scandals over the past few years. Barcode and other AutoID technology can bring asset tracking capabilities to China.

VDC's AutoID & Data Capture Practice's Summer Intern Gets Enamored by RFID

AutoID Focus: RFID

Several factors of everyday life are often misunderstood or generally ignored. VDC’s AutoID & Data Capture Practice's summer intern’s baptism into the world of AutoID, especially RFID, was eye opening and empowering. 

The Magic of Macy’s Omni-Channel Retailing Strategy Becoming More Potent with RFID

AutoID Focus: RFID

Omni-channel retail is an ideal in which all channels of a retailer are seamlessly integrated such that information is shared in real time. Macy’s has implemented RFID at the item-level for apparel and moving toward tagging other items with the goal of enabling omni-channel retailing.

The RFID Application Invasion Marches on

AutoID Focus: RFID

Friedrich Dick (a German cutlery company), Fleye (an action sports filming company), and the government of Taipei are all using RFID in creative ways. As RFID becomes more affordable and accessible, a higher number of companies and organizations are looking to implement RFID as solutions.

DC Velocity Talks Item-Level RFID and Distribution Centers with VDC’s Mike Liard

AutoID Focus: RFID

DC Velocity magazine sought thought leadership from several RFID experts on the impact that item-level RFID tagging will have on distribution centers. Mike Liard, of VDC, helped DC Velocity on both an article and a webcast concerning this issue.

Would You Pay Extra to Pay with NFC? Neither Would We.

Here’s a hypothetical decision: Would you pay $60 for an NFC-enabled iPhone case that enables you to pay via your smartphone—but only at ISIS partner merchants in Salt Lake City and Austin? Or, would you prefer to pay anywhere (at no additional cost) with old-fashioned cash or credit/debit cards? The choice seems absurdly clear—the vast majority (we would estimate 99%) of consumers will choose cash or card payment.

Still, despite a market opportunity that we believe is accurately summarized by the above choice, vendors with aspirations to cash in on mobile payment and NFC hype continue to introduce NFC retrofit solutions for smartphones lacking embedded NFC. Incipio is the latest entrant, having debuted its “Cashwrap” NFC-enabled iPhone 4/4S case earlier this week at CES. Incipio joins a market that seems crowded considering the nascent state of the NFC ecosystem in most regions. For example, companies such as DeviceFidelity, Flomio and Wireless Dynamics already offer (or are developing) similar accessories for both the iPhone and older Android devices. Frankly, given NFC’s weak support within enterprises and low awareness among consumers (not to mention that cash and cards are a free and highly effective alternative), we wonder: who is buying these products?

Among consumers, NFC contactless payment faces a daunting uphill battle to mainstream acceptance for at least two key reasons:

• Cash and cards’ familiarity with consumers across all demographics
• Security concerns, especially for solutions storing payment credentials on the device (as opposed to the cloud)

Keeping in mind the above factors, it is unlikely that the average consumer will spend additional money, time and effort to pay via NFC. If NFC-enabled contactless payment is to gain broader adoption, it must be absolutely frictionless to use (meaning no special cases, SIM or MicroSD card required) and offer incentives for ongoing use (for example, rewards or exclusive deals) to ensure consumers do not revert to cash or cards. Remember, cash and cards are accepted everywhere and cost the consumer nothing—in terms of money, time or effort—to use. We believe an NFC payment solution that cannot say the same has a highly challenging path to success.

VeriFone Furls its SAIL

Less than a year after launching its SAIL m.payment solution, payment terminal giant VeriFone has essentially pulled the plug on the product, which is its version of a Square-style card reader dongle. Citing a number of major challenges, including fierce competition in this nascent, but rapidly-growing market and the razor-thin margins on SAIL-based payments, the Company’s CEO officially disclosed SAIL would cease operations (save for continuing to service current users) in its recent Q4 earnings call.

While it is somewhat surprising that a well-established company like VeriFone is bailing out on a new product so quickly, the closure of SAIL clearly demonstrates the cutthroat competition in this market and could portend further consolidation or business failures of other similar ventures in the near-term. Certainly there is no shortage of Square-like solutions, with numerous hardware- and software-based competitors in the consumer-grade device mobile payment market (including Intuit, Paypal, Dwolla, iZettle and Groupon, just to name some high-profile players). Perhaps even more problematic for these m.payment service providers is that the business model on which they are founded is generally a race-to-the-bottom in regards to profit margins, with the major differentiator between each competitor often being the percentage fee charged for processing payments.

Looking ahead to the future, we believe the mobile payment competitors that will be viable for the long-term will be those that successfully layer value-added applications/services such as loyalty, coupons/offers and other mobile commerce functionality on top of their basic payment processing service. To the extent that these adjacent applications drive stronger customer loyalty, larger average ticket sizes and increased footfall for merchants, m.payment service providers can leverage them to generate additional revenue streams, differentiate their offering and attract new merchant partners. Conversely, we expect m.payment providers that remain reliant on processing fees for the majority of their revenues will see fiercer competition, shrinking margins and increasingly stronger chances of failure as payment processing service becomes more commoditized.

 

 

 

NCR Continues to Diversify with Acquisition of Retalix

NCR formally announced this past Wednesday an agreement to acquire Retalix, an Israeli vendor of retail, marketing, supply chain and logistics software solutions. The transaction is valued at $30 per share, or approximately $650 million and is expected to close sometime during Q1 2013. NCR intends to finance the acquisition via a combination of cash and an existing debt facility. Via the acquisition of Retalix, NCR strengthens its competitive position in several respects:

• Expanding its retail automation and customer engagement hardware offerings to include a more diversified range of software solutions, both for customer- and employee-facing applications
• Broadening its services portfolio to include additional professional/integration and managed services options
• Solidifying its status as a go-to vendor for end-to-end solutions that meet the specific, unique requirements of retail end users

We view the Retalix acquisition as a well-advised strategic move that furthers NCR’s diversification into the enterprise software market. While it has historically been known for high-end customer engagement and retail automation hardware (in addition to kiosks, ATMs, etc.), during the past 18 months, NCR has made a concerted effort to broaden its software portfolios—especially those geared towards retail and hospitality end users—via strategic acquisition and organic development.

For example, in August 2011, NCR acquired Radiant Systems, a specialized provider of hospitality POS software and solutions, for approximately $1.2 billion. The addition of Radiant materially strengthened NCR’s competitive position within hospitality, where the company had historically been weak relative to its status as a retail leader. In retail, the company recently launched its NCR Silver product—which enables merchants to integrate POS-enabled iPads, iPhones and iPod touches with stationary POS terminals—to address the rapidly growing demand for consumer-grade mobile device use in the enterprise. While Silver is geared towards SMBs, we expect the Retalix solutions that will soon be part of the NCR portfolio will appeal to a broader range of retailers, including Tier 1 leaders like Home Depot and Walmart, where the company has a well-established installed base.

Furthermore, we believe NCR’s efforts to diversify its software and service capabilities are indicative of a broader interest among end users (merchants and hospitality operators especially) to leverage technology platforms for a set of applications well beyond those with which they are traditionally associated. In the context of POS systems, for example, requirements now often include applications besides typical sales and payment functions. In hospitality, operators also need to accept/administer loyalty programs, manage digital menu boards, accept mobile payments/coupons and potentially support a range of back-of-house functions as well. Retail has similarly diverse requirements—and the acquisition of Retalix will enable NCR to meet these needs more consistently across a broader range of merchants. 

The growing importance of specialized merchant/hospitality solutions is a topic we will explore further our upcoming MCET research—contact us for details.

Google Wallet to Go “Back to the Future” to Drive NFC Adoption?

It is no big secret that Google Wallet has been challenged to gain adoption since it officially launched in September 2011. While the app faced a number of headwinds in its very early days, the initial version of Google Wallet was especially hamstrung by the very limited number of payment card types and smartphones that supported the app. Since its introduction, these problems have generally been addressed, as the app is now available on a broader range of devices and has implemented a new hybrid architecture that leverages cloud-based technology to enable almost any common credit/debit card to be used with Google Wallet.

Still, despite these improvements to accessibility and usability, Google Wallet has yet to gain traction with consumers and has left its management looking for other strategies to drive adoption. If recent rumors prove true, Google plans to introduce a decidedly low-tech expansion—in the form of a traditional plastic payment card—to its solution sometime soon.

Essentially, the Google Wallet card—as it is rumored—will enable consumers to load all the cards in their wallet onto an online portal and link them to the Google Wallet card, thereby offering the potential to slim down the brick-like stacks of cards many of us carry in our pockets and purses. The Google Wallet app (in conjunction with the online portal) would provide consumers the ability to manage which credit/debit card they want to pay with when using the Google card and continue to offer contactless payment for devices and merchants that support it. Rumors indicate that the card will only be available to Android users if/when it launches. Perhaps it will eventually be offered to iOS users too, but given the state of affairs between Google and Apple, we are not betting on it.

From a strategic perspective, we think adding a card extension to Google Wallet is well-advised, as it opens the app to a broader audience of potential users—including the majority of the US population that does not own an NFC-enabled phone. Furthermore, a Google Wallet card is a palatable intermediary step that could allow Google to ease mobile-payment-weary consumers into migrating from traditional card-based payment to mobile contactless payment.

From a consumer’s standpoint, consolidating multiple credit/debit cards into a single one is certainly an agreeable concept to those of us—myself included—that carry overloaded wallets. However, it is difficult to envision many consumers taking the initiative to obtain, configure and use a Google Wallet card/app solution for this benefit alone. To justify consumers’ investment of time and effort, there needs to be some kind of compelling, undeniably attractive incentive to reward them—something along the lines of cash-back rewards, discounts or some other feature that will capture consumers’ attention and keep them coming back for more. Otherwise, we see this rumored Google Wallet addition being another payment innovation flop.

Think Self-Checkout is Dead? Think Again.

During the past 18 months or so, we have observed a decidedly negative attitude towards the future viability of Self-Checkout (SCO) solutions in US retailers. Throughout 2011 and 2012, a number of large grocery chains—including Kroger and Albertsons—announced SCO lanes will be replaced with old-fashioned staffed lanes instead. The retail technology blogosphere has also joined the anti-automation bandwagon, with articles frequently bemoaning the clunky operation of early solutions and their perceived job-killing effect. Despite this anti-SCO sentiment, many store chains across all retail sub-verticals continue to offer SCO as a checkout option. In fact, some merchants are actually increasing SCO investment. This week, NCR announced it will deliver 10,000 additional SCO stations across WalMart’s 1200 US stores during 2013. Financial terms of the deal were not disclosed, but, based on VDC’s most recent AFSP data, we estimate the value of this contract to be approximately $150-160 million.

Notwithstanding its abandonment by certain retailers, SCO remains a useful technology when deployed in appropriate retail settings. Like any other solution, it has certain vertical/sub-vertical applications to which it’s well-suited, and others it’s not. While certain early SCO systems were buggy and difficult to use (we have experienced them ourselves), modern offerings have largely addressed these shortcomings, offer time-strapped shoppers an attractive alternative to waiting in line and often complement other retail solutions such as Personal Shopping Systems. VDC therefore believes SCO will remain an important component of many retailers’ broader front-end technology solutions, particularly in grocery/supermarket, mass merchants, wholesale clubs and home improvement stores.

In regards to WalMart’s upcoming SCO rollout, we expect its investment decision was motivated in part by the retailer’s ongoing experimentation with customer-operated mobile shopping apps. Specifically, WalMart is one of the founding members of the Merchant Customer Exchange (a consortium of more than 20 US merchants working cooperatively to develop an interoperable, cross-brand mobile wallet) and also recently announced small-scale pilots of a smartphone-based self-scanning app. As these two initiatives progress—and if/when they move towards full-scale deployment—we expect self-service technology like SCO will play a key role in their day-to-day use by customers. Convenience and time savings are two of the key value propositions these mobile apps offer, and both are strengthened by the presence of SCO as a checkout option. Accordingly, we expect to see SCO defend its established place within the retail automation spectrum, especially among technology-embracing merchants like WalMart . Furthermore, by virtue of its recognition as a retail sector leader, WalMart could give its SCO-doubting peers reason to reevaluate their own automation strategies.

RFID Could be the Prescription for Better Safety in Pharmaceutical Manufacturing

VDC believes recent, high-profile cases of tainted pharmaceuticals in the US potentially could drive RFID adoption within the US pharmaceutical industry. For example, consider the fungal meningitis outbreak that has emerged during the past several weeks and, to date, caused 25 deaths. Ultimately, the meningitis cases were linked to steroids manufactured by a Massachusetts-based company. As a result of the national scale and severe consequences of this incident, the US pharmaceutical industry is under intense public and regulatory scrutiny—and we think new, more stringent legislation for pharma could be the result. Specifically, VDC expects new FDA regulations governing the manufacture and tracing of drugs—from the manufacturer to the end consumer—could be one of the near-term outcomes of this outbreak. Such legislation could include mandated use of RFID or other solutions to provide better visibility into—and control of—the pharmaceutical supply chain.

Should the FDA require RFID use in pharmaceutical manufacturing, it would not be an unprecedented legislative development. In fact, the South Korean government has implemented regulations mandating RFID use by its domestic manufacturers to reduce drug counterfeiting and its various negative collateral effects (e.g., loss of revenues, reduced drug efficacy, risk to consumers, etc.). RFID tagging of drugs at the point of manufacture has a number of potential benefits, depending on the applications for which the technology is used. The following objectives are common RFID adoption drivers among pharmaceutical manufacturers:

• Ensuring drug authenticity
• Providing better visibility into the supply chain and chain-of-custody of controlled substances
• Improve patient safety by expediting recalls and eliminating counterfeit drugs

Considering the enormous size of the US pharma market (approximately $260 billion in 2011 revenues), increased adoption of RFID within this manufacturing sub-vertical would have material growth implications for the broader RFID market—especially if use of specific RFID solution types (e.g., track-and-trace, authentication) is mandated by future FDA legislation.

Regardless, bearing in mind the potentially dire consequences of tainted, counterfeited, or otherwise compromised drugs—both in terms of injury/death to consumers and the resulting liability claims, just to name two—VDC believes all pharmaceutical manufacturers are well-advised to evaluate all technology solutions (including RFID) that could improve patient safety and control of their supply chains, whether government mandated or not.

Datalogic Celebrates its 40th Anniversary

This week, Datalogic, a global leader in the market for barcode readers, mobile computers, machine vision systems, personal shopping/self-scanning systems and other AutoID solutions is celebrating its 40^th anniversary. During its infancy in the early 70s, the Company specialized in the manufacture of photoelectric sensors for the textile, ceramics and packaging industries, but via ongoing investment in in-house R&D and strategic acquisitions, Datalogic’s product portfolio has steadily expanded to include a spectrum of AutoID solutions. During four decades of operation, the Italy-based Company has also vastly increased the geographic scope of its business, expanding from its original European focus to become a truly global AutoID vendor.

While Datalogic has maintained an international presence across EMEA, Asia-Pacific and the Americas since the 80s, the Company has historically been strongest in its home European market. However, over the past 18 months, Datalogic has made a concerted effort to fortify its competitive position in the Americas, particularly within the US market. To achieve this goal, the Company recently completed two significant acquisitions—PPT Vision, a supplier of machine vision solutions, and Accu-Sort, a vendor of industrial scanning and imaging solutions.

Not only have both of these acquisitions materially boosted Datalogic’s market share within each respective technology market; they also have afforded the Company instant access to well-established regional distribution networks and new application/vertical opportunities. Via the Accu-Sort transaction, Datalogic became the stationary industrial barcode scanner share leader in the Americas, according to VDC’s data. VDC expects the Company will continue to strengthen its presence in that region as it integrates these two acquisitions and fully harnesses the operational and sales synergies they offer.

Looking to the future, VDC believes Datalogic will continue to build its presence in the AutoID markets via pursuing additional complementary acquisitions, logical expansion into adjacent/emerging technologies and maintaining its position as an AutoID innovator through ongoing R&D investment.